Overtaking in corners, Nuggets' new track丨Deep exploration of A-share growth (10) Life Sciences

21st Century Business Herald reporter Lin Dianchi reported from Shenzhen

A few days ago, the 2023 Central Economic Work Conference was held in Beijing, which comprehensively summarized the economic work in 2023, deeply analyzed the current economic situation, and systematically deployed the economic work in 2024.

The meeting pointed out that it is necessary to lead the construction of a modern industrial system with scientific and technological innovation, and open up new tracks for future industries such as quantum and life sciences.

In recent years, the field of life science and new drug research has been changing with each passing day, new basic research results and new technologies have been emerging, and technologies such as cell and gene therapy (CGT) and antibody drug conjugate (ADC) have developed rapidly.

The rapid rise of new technologies has also prompted the demand for biological reagents in the biopharmaceutical industry to continue to expand, driving the market to further expand. SZ), Sino Biological (301047.SZ), Univision (301166.SZ) and other Shenzhen-listed companies have gradually emerged in the global competition.

When the biological reagent "overtaking in a corner" is carried out

In 2023, with the recovery of R&D, production and procurement demand from universities and enterprises, the life sciences sector as a whole will remain resilient, the impact of the new crown will gradually subside, and the overall development will be in line with expectations.

According to the Frost &Sullivan report, the global biologics market is expected to reach $456.7 billion in 2024, growing at a CAGR of 9.8%.

Under the combined effect of favorable factors such as the expiration of patents for original drug preparations, the growth of medical demand, and the improvement of the regulatory system, the compound annual growth rate of the global biopharmaceutical market is significantly higher than the average level of the pharmaceutical market in the same period.

As life sciences is an emerging industry, although the Shenzhen Stock Exchange has not yet formed a relevant industrial chain, it has still given birth to a number of leading enterprises in subdivided fields.

"Continental in recombinant proteins, enzymes and culture media and other biological reagents have appeared on behalf of enterprises, they not only enjoy a good reputation in China, but also participate in the competition in overseas markets, in the field of biological reagents these companies are expected to go abroad, become an excellent supplier of global biological reagents. Sun Yuanyuan, a 21 gold medal analyst and chief analyst of the pharmaceutical industry of Industrial Securities, said in an interview with a reporter from the 21st Century Business Herald.

As a leading recombinant protein reagent in China, Bepsis is in the upstream of the biopharmaceutical industry chain, mainly providing recombinant proteins, antibodies and other biological reagents for global pharmaceutical companies, biotechnology companies and scientific research institutions.

Southwest Securities said that the quality of Pepsis products is excellent, and the overseas market size is larger than that of the domestic market, and the company's overseas business growth is expected to maintain rapid and stable growth, and the compound growth rate of overseas revenue growth in the next three years is 30%.

"The company's sales channels have covered the Asia-Pacific, North America and Europe and other regions, can directly reach end application customers, and have R&D centers in China and the United States, and can fully communicate and cooperate with European and American pharmaceutical companies, biotechnology companies and scientific research institutions. Pepsis said on the investor interactive platform.

Sun Yuanyuan said that from the perspective of the industry as a whole, the market share of domestic biological reagents is rising, and the hot spots of R&D in the R&D scene of enterprises are relatively concentrated, which is actually more conducive to the concentration of resources by mainland biological reagent companies, and take the lead in breaking through the hot spots and pain points of customer needs, breaking the monopoly of foreign biological reagents.

In 2021, Sino Biological was listed as the "second most expensive new stock in the history of A-shares", and it is also a leading company in domestic biological reagents, ranking third in the world in terms of market share of recombinant proteins.

As of the end of the third quarter, Sino Biological's R&D investment has reached 61.0375 million yuan, exceeding the full year of 2022. In October this year, the Suzhou subsidiary was fully put into operation, and in the same month, it announced the acquisition of 100% equity of SignalChem Biotech Inc. in Canada for $48 million, accelerating the pace of globalization.

What few people know is that in the face of new demand for biotechnology, domestic and foreign manufacturers are on the same starting line. Sun Yuanyuan said that because of the late start, domestic companies need to spend a lot of effort to make up for the gap in the field of stock, and the research and development speed and supply speed of new domestic reagent products are faster than those of overseas companies, such as new target proteins, and the new products developed by domestic companies are faster than those of foreign countries.

Nuggets life sciences new track

In the context of the relatively complex external environment and the cold capital market, the overall investment and financing of life sciences this year has encountered phased difficulties.

In the first half of 2023, a total of 196 biopharmaceutical companies in China received financing in the primary market, with a total financing amount of 31 billion yuan, a decrease of 21.6% compared with the same period last year.

However, the development of the life sciences industry has not stopped because of the cold of capital. Although a series of difficulties in safety and delivery efficiency need to be overcome, in the long run, the exploration of new technologies such as cell therapy, gene therapy, peptide drugs and small nucleic acid drugs is the eternal theme of life science development.

For the new track in the future, in Sun Yuanyuan's view, on the one hand, it is the differentiated innovation in the field of innovative drugs. Domestic innovative drugs have entered the harvest period. With the trend of increasing the total international transaction volume of domestic innovative drugs and increasing the frequency of transactions, domestic innovative pharmaceutical companies have deployed a number of innovative drugs with international potential in their pipelines.

Among them, the internationalization of innovative drug technology represented by ADC has performed well, and ADC-related research has shown an accelerating trend.

Guolian Securities Research Report pointed out that ADC drugs have the potential to replace traditional chemotherapy and have a broad market space. ADCs combine precisely targeted monoclonal antibodies with small molecule drugs with cell-killing toxicity to achieve both efficacy and targeting, and the monotherapy form is mainly used in the end-line treatment of tumors, which can overcome the limitations of traditional chemotherapy and targeted therapy.

At present, a total of 15 ADC drugs in the world have been approved by the FDA for marketing, and Frost & Sullivan expects the global ADC drug market to grow from US$11.4 billion to US$64.7 billion from 2023 to 2030, with a compound growth rate of 28.1%.

Recently, Huadong Medicine (000963. SZ) said on the investor interactive platform that in the field of oncology, the Chinese BLA application for the world's first ADC new drug somituximab injection introduced by the company from ImmunoGen in the United States has been accepted in October 2023, and the product was included in the list of priority review varieties by the CDE in July 2023 and is expected to be approved for marketing in 2024.

On the other hand, Sun Yuanyuan said that the progress of the life science industry also comes from the continuous trial and pursuit of new technological paths. The approval of Casgevy, the world's first CRISPR/Cas9-based gene editing drug, is expected to drive the development of the peptide drug industry in terms of hypoglycemic and weight loss, and the maturity of related technologies and industrial chains is just around the corner.

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